Trump tariffs: EU may take ‘nuclear’ option and target US tech giants

A New York Stock Exchange trader watching a TV broadcast of Donald Trump speaking from the White House on Wednesday. The tariffs he announced have caused markets to tumble worldwide. Picture: Michael Nagle/Bloomberg

Europe’s powerhouse nations are prepared to use the “nuclear” option by targeting US tech companies in retaliation to US president Donald Trump’s 20% tariff announcement.

Both France and Germany have indicated a willingness to target US tech giants operating in Europe with retaliatory tariffs, in a move that could have devastating economic consequences for Ireland.

Most top US tech companies, such as Apple, Meta, and Google, have European headquarters in Ireland, creating thousands of jobs here and generating bumper taxes for the economy.

The Government has moved to play down the tech threat from France and Germany, with senior sources suggesting that these countries are “flexing muscles” in order to enter talks with the Trump administration on a strong footing.

However, senior Coalition figures are now preparing for further tariffs on the pharma sector, which was spared in Mr Trump’s ‘Liberation Day’ announcement of sweeping 20% tariffs on EU products.

Global stock markets experienced dramatic tumbles in the wake of Mr Trump’s speech and the US dollar hit a six-month low, going down at least 2.2% yesterday morning compared to other major currencies.

Nearly $300bn was wiped off Apple’s value amid the stock market turmoil, with shares in the online giant plummeting by 9%.

European leaders have been unanimous in their condemnation of the “fundamentally wrong” tariffs, with EU Commission president Ursula von der Leyen announcing that the bloc is “preparing for further countermeasures”.

The commission has drawn up a menu of retaliatory actions that could be deployed, but it has so far held off from publishing the list.

France and Germany want to target tech

France and Germany are pushing for a more forceful response to the Trump measures, suggesting that the tech sector should be targeted.

Describing the tariffs as “brutal and unfounded”, French president Emmanuel Macron said nothing should be ruled out and referenced the anti-coercion mechanism.

This instrument includes powers to restrict US banks from accessing the EU procurement market, as well as increasing taxes and regulation on US tech firms.

Germany’s economy minister, Robert Habeck, suggested that the EU could go after American tech titans by hitting them with a tax, insisting that “everything is on the table”.

“The big tech companies have an incredible dominance in Europe and are largely exempt from European taxes,” he said.

Taoiseach warns against 'nuclear option' 

Voicing strong opposition to a move against the tech sector, Taoiseach Micheál Martin said this would amount to “a really fully fledged trade war, which would have even more damaging repercussions”.

Taoiseach Micheál Martin and EU Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection Michael McGrath arriving for their press conference at Government Buildings on Thursday. Picture: Sam Boal/Collins

“We’re against that, certainly initially, and it is our view that there is no point in making things worse,” said Mr Martin.

“The big tech sector is a big employer across Europe and is an important sector.”

Describing it as a nuclear option, the Taoiseach added that “there are more options right now in terms of an initial response”.

Responding to reports that large US tech firms could be targeted by EU retaliation, Fergal O’Brien, executive director of industry body Ibec, cautioned: “So many companies are reliant on US technology to keep their businesses operating and do not have an alternative. So the EU must be really careful in how it justifies the response.”

France and Germany 'flexing muscles'

Moving to play down the tech threat, one senior Coalition figure suggested that France and Germany are “flexing muscles” ahead of expected negotiations with the US.

“You can see why France and Germany would take this position,” the source said, but added: “My strong sense is that is not where the EU is at today.

“There would be huge opposition to it from a lot of member states.”

EU trade commissioner Maros Sefcovic will begin engaging with his US counterparts on Friday, but made it clear that “unjustified tariffs inevitably backfire”.

Time for talks but 'we won't stand idly by'

“We’ll act in a calm, carefully-phased, unified way, as we calibrate our response, while allowing adequate time for talks,” he said. “But we won’t stand idly by, should we be unable to reach a fair deal.”

His discussions come ahead of a crunch meeting of European trade ministers in Luxembourg, which Tánaiste Simon Harris will attend, on Monday.

Today, Friday, Mr Harris will convene a critical meeting of the Government Trade Forum, with potential further tariffs on the pharmaceutical industry a key item on the agenda.

“My working assumption has to be that there will be further measures directed at pharma or at least that’s the intention of the US administration,” Mr Harris said, citing Mr Trump’s move to introduce sectoral tariffs on steel, aluminium, and the automotive industry.

Meanwhile, the Taoiseach said the Government is going to look at calls from Ibec and Labour for short-term work schemes for sectors that may be affected.

"This could be for the long haul," he told RTÉ's Morning Ireland. "As President Von der Leyen to me, the old order is gone here. Anything we do has to be targeted. It has to be future-oriented and the mechanisms we use may very well be different."

He said a different approach compared to covid schemes may be needed, also saying that government priorities in terms of housing and disability will not change because of the tariffs.

On the 20% tariff on goods in the Republic and a 10% tariff in Northern Ireland, Mr Martin called for clarity. 

"We're going to have to work our way through that. Because the dairy industry, for example, on the island of Ireland is one industry. It doesn't respect the border. We had all of this debate during the Brexit saga. And indeed, Windsor does allow some frameworks, but mainly for Northern Ireland businesses and so forth. 

"So these are issues we're going to pursue, both with Europe and indeed with the US administration in terms of that differential on the island of Ireland. Take the car industry - that's been hit with a massive tariff that really impacts Germany, which is having challenges right now. It impacts Slovakia and a number of other member states. 

"So every part of the European Union is impacted by this tariff imposition. And we are impacted in agri-food in particular and potentially in other sectors down the line."